Average rental rates for residential apartments in Abu Dhabi

Landlords hold key to rent cap

Last week’s decree to restrict rent increases in Abu Dhabi has been widely applauded by residents, but it is not just people living in Abu Dhabi who will benefit from the imposed seven per cent per ceiling. The new ruling applies to commercial properties too, and that will be an important confidence boost for companies that have struggled to keep pace with rising prices.

The rent cap will definitely provide some respite for tenants who have seen annual rents jump by more than 30 per cent. However, new ten ants will still be liable to pay the prevailing market rate. You could say, of course, that every silver lining has a cloud, and there are concerns that landlords will seek to replace tenants in order to keep rents in line with the market.

The new law allows an annual rent increase of seven per cent, while previous standards permitted an increase of up to 20 per cent after two years. But the general view is that government intervention to keep the cost of living in the capital in line with people’s ability to pay is both sound and sensible.

From an investor’s point of view, the rent cap might be less attractive in the short term, but buyers of properties need a bouyant market of tenants able to afford their properties if the industry is to prosper in the longer term. A rent cap will help to sustain high demand and allow investors to forecast annual gains in rent revenue.

Overall, the legislation is a good thing as it provides clarity, which in turn helps industry confidence. Clearer rules will lead to more professionally structured leases in line with international standards, which remove ambiguities and are ultimately fairer to both the landlord and tenant.

Dubai and Sharjah too have witnessed massive increases in rents over the last year, with average gains of around 25 to 30 per cent. Dubai announced a rent cap last year, and Abu Dhabi is now following its lead. The authorities have done their part and provided clear direction, it is now up to the industry to ensure proper implementation of the guidelines – and this will be key to their

Last week’s decree to restrict rent increases in Abu Dhabi has been widely applauded by res- idents, but it is not just peo- ple living in Abu Dhabi who will benefit from the imposed seven per cent per ceiling. The new ruling applies to commercial properties too, and that will be an important con- fidence boost for companies that have struggled to keep pace with rising prices. The rent cap will definitely provide some respite for ten- ants who have seen annual rents jump by more than 30 per cent. However, new ten- ants will still be liable to pay the prevailing market rate. You could say, of course, that every silver lining has a cloud, and there are concerns that landlords will seek to replace tenants in order to keep rents in line with the market. The new law allows an annu- al rent increase of seven per cent, while previous standards permitted an increase of up to 20 per cent after two years. But the general view is that government intervention to keep the cost of living in the capital in line with people’s ability to pay is both sound and sensible. From an investor’s point of view, the rent cap might be less attractive in the short term, but buyers of proper- ties need a bouyant market of tenants able to afford their properties if the industry is to prosper in the longer term. A rent cap will help to sustain high demand and allow investors to forecast annual gains in rent revenue. Overall, the legislation is a good thing as it provides clarity, which in turn helps indus- try confidence. Clearer rules will lead to more profession- ally structured leases in line with international standards, which remove ambiguities and are ultimately fairer to both the landlord and tenant. Dubai and Sharjah too have witnessed massive increases in rents over the last year, with average gains of around 25 to 30 per cent. Dubai announced a rent cap last year, and Abu Dhabi is now following its lead. The authorities have done their part and provided clear direction, it is now up to the industry to ensure prop- er implementation of the guidelines – and this will be key to their success.

Source: Emiratestodayonline

What to look out for

With so much development going on in Dubai, it can be difficult to spot the good projects from the bad, so below are some more top tips to help make sure you do not buy a property that was built on the cheap.

Carefully examine the property’s walls and floors for physical imperfections, such as wonky tiling Pay particular attention to the quality of finishes and the thickness of work surfaces Count the plug sockets in each room, especially the kitchen, which should have at least six. Many Dubai kitchens have three plugs or fewer Examine the front door. A good one will be solid and 65 millimetres thick, while some developers will try to get away with a hollow 45mm door Consider the property’s layout. Are there any unusual shaped rooms that would be difficult to place furniture or appliances into?

Try to find out where the wiring is from. European wiring is superior, but don’t be surprised to discover a cheap Chinese alternative has been used. It could be useful to ask an electrician to look for problems such as burned wiring, overfused circuits and improper wiring connections Examine the door and window seals, because your home will be plagued by dust if these are inadequate Tree roots can cause damage to foundations, so check to see if there are any large ones nearby If you are considering a home that has already been lived in, ask the seller probing questions, such as why they are selling, how long they have lived there and what problems they have had with the property Noise can also be a major issue, especially in apartments, so ask the seller about neighbours Look for large cracks in walls, crooked doors and an uneven roof line, because these could be signs of subsidence Examine the light switches. The plastic clip-on ones with the exposed screws are the cheapest and may indicate that other fixtures are of a similar low quality

With so much development going on in Dubai, it can be difficult to spot the good projects from the bad, so below are some more top tips to help make sure you do not buy a property that was built on the cheap. Carefully examine the property’s walls and floors for physical imperfections, such as wonky tiling Pay particular attention to the quality of finishes and the thickness of work surfaces Count the plug sockets in each room, especially the kitchen, which should have at least six. Many Dubai kitchens have three plugs or fewer Examine the front door. A good one will be solid and 65 millimetres thick, while some developers will try to get away with a hollow 45mm door Consider the property’s layout. Are there any unusual shaped rooms that would be difficult to place furniture or appliances into? Try to find out where the wiring is from. European wiring is superior, but don’t be surprised to discover a cheap Chinese alternative has been used. It could be useful to ask an electrician to look for problems such as burned wiring, overfused circuits and improper wiring connections Examine the door and window seals, because your home will be plagued by dust if these are inadequate Tree roots can cause damage to foundations, so check to see if there are any large ones nearby If you are considering a home that has already been lived in, ask the seller probing questions, such as why they are selling, how long they have lived there and what problems they have had with the property Noise can also be a major issue, especially in apartments, so ask the seller about neighbours Look for large cracks in walls, crooked doors and an uneven roof line, because these could be signs of subsidence Examine the light switches. The plastic clip-on ones with the exposed screws are the cheapest and may indicate that other fixtures are of a similar low quality.

Source: Emiratetodayonline

Pitfalls of home ownership

Buying a property can be a risky business, especially for those entering the market for the first time. According to Roger Wakeham, director at property developers CHI, many buyers have been shortchanged by developers who cut corners to reduce costs, and what may seem like a dream home could well turn in to a nightmare.

“Some developers think the bottom line is the most important thing and have ended up in trouble, making savings on things which cannot be seen, such as wiring and drains,” said Wakeham.

“The quality of construction is often hideous. I know of someone who bought a villa for Dh2.4 million three years ago and recently sold it for Dh6m, but it’s of such poor quality it should be torn down.

“There is an oversimplification of the property market in Dubai. Too much emphasis is placed on square-foot rates, rather than the quality of construction and finishes. Dubai prices are still cheaper than Singapore's, so there’s still room for growth.” Homeowners could be in for a nasty surprise when the first rains arrive, if the developer has scrimped on insulation or water proofing.

Dubai experiences rain about five times a year and this can cause flash flooding.Your villa will flood if its drains are not robust enough.

“Developers in Dubai lack the experience of building villas in wet climates and so don’t have the necessary understanding of managing rainfall.

“In Europe, houses have pitched roofs, not for aesthetics, but to deal with rainfall, whereas Dubai’s flat roofs are ill-equipped to cope with water, and will leak unless properly insulated,” said Wakeham.

When inspecting a property for potential possession, take notes for future reference and comparison, and make at least two visits during daylight and at night. You could be in for a nasty surprise if the road is used as a cut-through by rush-hour motorists, for example. Air conditioning is a crucial factor. Cheaper-built villas will have the uglier, officestyle square ceiling vents, as opposed to less obtrusive recessed units.

Also check to see if each room has its own control unit, otherwise you will be conditioning empty rooms and running up a huge, unnecessary electricity bill. Villas with individual room controllers may be more expensive, but will save you money in the long run.

“All the time, I see people ripping out tiles and fittings because they were so low quality. By being careful, you can save yourself a lot of time, hassle and money,” Wakeham added.

Source: Emiratestodayonline

Agents say Dubai should not follow Abu Dhabi cap

It's unjustified to harbour hopes of Dubai following Abu Dhabi in lowering the cap on rent increases, real estate observers feel. The reason why is simple: the markets are completely different. Abu Dhabi announced this week the introduction of a seven per cent rent increase cap in the year ahead. Dubai's current 15 per cent cap rule comes to an end on December 31 and a decision on its extension is awaited. Dubai Rent Committee Chairman Saeed Mohammad Al Gandi said, according to a news report, that the it is not contemplating any change at this point. Read More..

Dubai Average Rental Rates for Residential Apartments

Source: Emiratestodayonline

No Dubai reduced rent cap

Dubai is unlikely to follow Abu Dhabi's lead and reduce its rental increase cap below 15%, according to the chairman of Dubai Rent Committee quoted by 7Days. Abu Dhabi is capping increases at 7% a year. Dubai's rent cap expires at the end of 2006, but reports suggest rents and property prices will soften by 5% in late 2007

Source: AME Info

Abu Dhabi caps rent rise at 7%

While this blog is primarily dedicated to providing updates and news on rental and real estate markets in the emirate of Dubai I could not resist posting an article in today's issue of the Gulf News about the rent cap in Abu Dhabi. Who would have guessed! Abu Dhabi has capped rent increases by 7% annually. In my opinion Dubai should follow suit. Read More..

Property prices and residential rents in Dubai to fall 5% in 2007

Property prices and residential rents in Dubai will ease five per cent in 2007 after hitting a peak early that year as supply of new units will outpace demand, Standard Chartered Bank said yesterday.

Steve Brice, regional head of research for the bank for the Middle East, told reporters the fall in rents in Dubai will be offset by a rise in Abu Dhabi where liberalisation and investment is fuelling a boom. Read More..

History of Freehold Property in the Emirates

Non-GCC expats living in the United Arab Emirates (UAE) were previously only permitted to rent property, or own property on the federal law approved 99-year leasehold basis. This all changed in 2002, when the Dubai government permitted the ownership of freehold property to expats, which has changed the real estate industry in the Middle East and Gulf regions.

Dubai Freehold Property
As the emirate of Dubai is not rich with oil like Abu Dhabi, Dubai has always focused on the development of its economy by establishing itself as a trading hub between the East and West. In addition to this, it is also establishing itself as the tourism destination for the region, so it has worked heavily on the promotion of real estate development. Read More..

Renting Property in the Emirates

Not until recently have expats been able to own property in the United Arab Emirates [UAE], which limited non GCC nationals to lease property to live in. Even though it is now possible to own freehold property on Dubai, Ajman, and Ras Al Khaimah, renting of property will always be the dominant property market in the Emirates.

Rental Requirements
In order to rent property in the United Arab Emirates, you will normally have to pay for the entire year of tenancy either in cash or checks. If payment is made by cheques, most landlords will limit it to 2 to 4 cheque payments. In addition to the tenancy payment, if the flat/apartment/condo or house/villa was taken through a property agency, then a 5% commission is required to be paid to them. Most premises will require the payment of a refundable security deposit of 500 to 5,000 dirhams. As utility bills are paid by a tenant, it is normally required that a refundable deposit of 1,000 to 2,000 dirhams be paid to the landlord for usage of water, electricity and gas. Some premises also require the payment of a 10% municipal tax (Sharjah has a 5% municipal tax).

Rental Laws
Tenancy contracts in the United Arab Emirates normally last for a year, with exception to Sharjah which is normally for three years, and within that time landlords are not permitted to increase the rental price until it requires renewal. At the time of renewal, a landlord is not permitted to increase the rent by more than 20% (15% in Dubai as of 12th Nov. 2005). If a dispute happens between a tenant and landlord on the price increase, the issue should be taken to the Municipality's Rent Control Committee to settle. To file a case with the Rent Control Committee will cost 400 or 500 dirhams and will take normally take between a few weeks or months before being summoned to appear before the committee. If the case is won, then the fee paid to file a case will be paid for by the landlord.

Landlord Obligations
Landlords are normally obligated to handle the annual maintenance of their property and they are not permitted to evict a tenant without just cause within the tenancy contract time period.

Source: TEN Real Estate

The Palm Island delay and the coming Dubai property crash

Delays of six months and more in delivering property on The Palm, Jumeirah underline an important fact about the Dubai property market. Delays are mounting, and each delay puts more pressure on local supply, increasing property prices and rentals. For while construction delays have become a part of Dubai commercial life, the demand from new migrants for places to live continues to grow day after day. The latest delay to arguably the most high profile Dubai real estate project of all, The Palm Jumeirah, is both a factor and a demonstration of this process writ large. Nakheel will now deliver 500 out of 3,900 apartments in November - six months late, 25 per cent by the year end, 75 per cent by April and the remainder by June 2007. Buyers on The Palm, Jumeirah have been offered the option of the original sale price back plus interest. However, as prices have more than doubled since the project was launched there have been no takers.

Reputation damage
This sort of failure to deliver on promises does not enhance the reputation of Dubai developers, and at the margin it could dissuade some international investors from becoming involved. But for many market participants it is just something to be expected in the advanced stages of a major property boom and with a project as complicated as a huge land reclamation. Indeed, this is the normal pattern seen in emerging market construction booms. A rush to develop followed by high levels of construction cost inflation and then late delivery, though the profits already made by most buyers of Palm Island property will ensure that few complaints become public. What is more interesting is the knock-on effect on the rest of the real estate market mentioned at the start of this article. It is another fact of life in the Dubai property market that real estate prices and rentals are continuing to rise this autumn.

Prices still rising
The price of a one-bedroom flat in The Greens is up by $27,000 since the summer and Meadows five-bedroom villas by $40,000, for example. How much of this is due to construction project delays, and how much is due to the pressure of new arrivals in Dubai is hard to tell. But both are clearly factors and as long as both continue so will the boom. Property crash forecasters will surely be right in the end, but when? And how much in rent will would-be local buyers have paid out by then? Those siren expatriate voices from the UK who sold their UK homes in 2000 expecting a property crash should remember that history has a habit of repeating itself, and that real estate booms can run on for a lot longer than is generally expected. What if oil prices stay relatively high for the next few years and the Middle East economic boom holds? Then we can put back the year of the Dubai property crash yet again, especially if more projects get delayed as seems inevitable and people continue to migrate to Dubai from other parts of this troubled region.

Source: AME Info